ACHIEVING ENVIRONMENTAL RESULTS STRATEGY AND EXECUTION Myron Burr Environmental Affairs 2008-05-22

ACHIEVING ENVIRONMENTAL RESULTS STRATEGY AND EXECUTION

Myron Burr

Environmental Affairs

2008-05-22

Achieving Environmental ResultsMyron BurrEnvironmental Affairs

2008-05-22Company ConfidentialPage 2

DISCLAIMER

● This presentation has been prepared by Siltronic AG solely for your information. The presentation is confidential and is part of Siltronic AG’s corporate intellectual property. Siltronic has made this presentation available to you on condition that you do not claim any other rights related thereto and that you undertake to observe the rules of confidentiality. In particular, this presentation may not be reproduced or redistributed, in whole or in part, to any other person.

● This presentation may contain forward-looking statements that are based on assumptions and estimates made by Siltronic’s Executive Board. Any statement in this presentation that states the Company's intentions, beliefs, expectations or predictions (and the assumptions underlying them) is a forward-looking statement. These statements are based on plans, estimates and projections as they are currently available to the management of the Company. Forward-looking statements therefore speak only as of the date they are made, and the Company undertakes no obligation to update publicly any of them in light of new information or future events. These assumptions may harbor risks and uncertainties that could ultimately produce the result that actual developments are considerably different than the forward-looking statements. Among the factors that could cause such differences include changes in the economic and business environment, exchange rate and/or interest rate movements, the introduction of competing products, inadequate acceptance of new products or services and changes in the business strategy.

● No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, the Company or its parent or subsidiary undertakings or any of such person’s officers or employees do not accept any liability whatsoever arising directly or indirectly from the use of this document.

● By accepting this presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Company’s business.

● Neither this presentation nor any information contained herein constitute or form a part of, and should not be construed as, an offer or invitation to subscribe for or purchase any securities.



OVERVIEW

● Company Brief Background

● Environmental Framework:● Strategy Map Lays Out Vision and How to Get There ● Execution to Achieve Results

● Areas of Environmental Focus

● Challenges

● Successes

● Lessons Learned



IMAGINE THE 21ST CENTURY WITHOUT SILICON

Electronics~USD 1,258 bn

SemiconductorsUSD 227 bn

Silicon wafersUSD 12.1 bn

Source: SEMI, Gartner, WSTS

Electronic grade polysiliconUSD 1.2 bn

2007



GLOBAL MANUFACTURING FOOTPRINT

Hikari

Burghausen

Freiberg

Portland

Singapore

HeadquarterMunich



PORTLAND, OREGON – SPECIALTY PRODUCTS CENTER

● First production facility of Siltronic outside Germany (opened in 1980)

● Expanded the production capabilities in 1996 with the start-up of a 200mm manufacturing facility

● Production of wafers with diameters of 150 and 200 mm

● Portland primarily serves the North American and European markets

● Portland is the specialty product center of excellence

● Approx. 900 employees

● Approx. 80+ acres on Willamette River in Portland city limits



SILTRONIC PORTLAND SITE



HONORS

● Siltronic’s environmental achievements have been recognized 23 times by Federal, State and Local Agencies

● Most recently

● National Environmental Performance Track Large Facility Annual Award for exemplary environmental performance, (US EPA May 2007)

● State of Oregon Sustainability Focus Award for commitment to sustainable business practices (Oregon Sustainability Board, June 2007)

● Five Year Environmental Excellence Award for perfect performance of wastewater pretreatment operations (City of Portland, June 2007)

● Facility of the Year Award (Environmental Protection magazine, September 2007, one of five facilities)



EXAMPLES OF STRATEGIC OBJECTIVES AND LINKAGES

● Cultural Vision is Foundation for Effective Environmental Strategy● Initiatives, Work Packages, Projects and Programs Map to Strategic

Objectives ● Integration of Business and Environmental Goals for Sustainability● Alignment of Resources to Achieve these Goals

ORGANIZATIONAL

PERSPECTIVE:

CULTURE

Environmental, Health and Safety

FINANCIAL

PERSPECTIVE

CUSTOMER

PERSPECTIVE

ORGANIZATIONAL

PERSPECTIVE

Profitability

Quality

Cost Reduction

INITIATIVES

PROJECTS

PROGRAMS

WORK

PACKAGES



EXECUTION TO ACHIEVE RESULTS

● Culture is Established by Environmental Policy● “Distributed / Everyone’s Responsibility”

● Establish specific goals

● Link to specific projects ● Initiatives, Projects, Programs, Work Packages● Align resources

● Monitor and Report Progress Monthly● Balanced Scorecard (Red, Yellow, Green Dashboard)

● Adjust approach through Corrective Actions (AR’s)

● Goals Reviewed Monthly and Updated as Necessary



AREAS OF ENVIRONMENTAL FOCUS

● Greenhouse Gas Reduction● Energy Conservation: Electricity and Natural Gas

● Chemical Use Reduction● Aggregate of over 200 chemicals

● Recycling Rate● 25 Solid Waste Categories● Greater than 50% in 2007

● Water Conservation● Survey Areas for Reduction Opportunities● Several Significant Re-use Projects

● Nitrate Discharge Reduction● Re-use Program● Reduced Use



CHALLENGES

● Developing New Environmental Re-use or Treatment Technologies● R&D Timeline Can be Very Long● Management Awareness and Support Critical● Re-use Can Affect Long-term Capabilities of Equipment

● Changing Manufacturing Processes● Concern for Quality to Customer● R&D Timeline Can be Very Long

● Developing External Support Capabilities● Willingness by Parties to Enter into New Contracts● Use of Public Databases to Identify Outside Resources

● Competition for Capital● Pareto to Identify High Impacts and High Use● Life Cycle Analysis: Multiple Costs and Multiple Benefits● Tax and Other Credits● History of Successes (Timeline and ROI)



SUCCESSES: GREENHOUSE GAS REDUCTION

● 5 Year Reductions in GHG Emissions

● Electricity Conservation 5.8 % absolute

● Natural Gas Conservation 27.5 % absolute

● Energy Overall 8.9 % absolute

● Units produced per MTCO2e 54.3 % increase normalized

● Additional GHG Reductions from

● Wind Energy Purchases● Chemical Reclaim and Re-use Programs



GREENHOUSE GASES

● Major Capital Projects● Heat exchangers● Reconfigure Site Chillers to Remove Older, Inefficient Units

● Smaller Capital Projects● Variable Frequency Drives to Follow Load● Premium Efficiency Motors

● Operational Changes● Low-Pressure Drop Air Filters● Reduced HVAC Air Flow● Improved Steam Trap Maintenance● Improved HVAC Controls



FAB1 CHILLED WATER / HEAT RECOVERY CROSS TIE

● Projected Benefits (March 2008 startup)

● Greenhouse reductions 2,100 MTCO2e/YR● Annual natural gas savings 24 % from 2007● Annual electrical savings 1 % from 2007● Business Energy Tax Credit● Self Direct Credit (Oregon program)● Eliminated maintenance● Improved Reliability

● Future extension of the project could yield similar CO2 reductions.



ENERGY SAVINGS FROM STEAM TRAP REPAIRS

● Steam Trap Savings Reduced Boiler Load:

● Survey: ● Significant percentage of traps failed● Many traps operating at high pressure

● Savings of 7 % from 2007● GHG reduced by 476 MTCO2e/YR

● Resulted in the Lay-up of One Boiler



HEAT LOAD REDUCTION AND ENERGY SAVINGS

Annual Natural Gas Use Is Below 1996 ConsumptionEven While Manufacturing Production is Up Significantly

(million cubic feet per year)

0

50

100

150

200

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008proj.



ENERGY SAVINGS IN HEATING, VENTILATION, AIR CONDITIONING

● Reduced Air Handler Fan Electrical Power Consumption via Larger Surface Area Air Filters (Lower Pressure Drop)

● 1.4 % Reduction in Electrical Use from 2007● GHG Reductions 693 MTCO2e/YR● No Capital Expense

Source: Freudenberg Group



SUCCESSES:AGGREGATE CHEMICAL USE REDUCTION PROGRESS

Chemical Use Reduction(annual lbs per unit of production)

2,00

4,00

6,00

8,00

2003 2004 2005 2006 2007



SUCCESSES:WASTEWATER REUSE PROJECT

● City water used to flush silicon fines from drain lines to reduce plugging.

● Plugged drains resulted in scheduled downtime every six months to clean drains

● Acidic (pH 5) wastewater found to keep drains clear and prevent downtime

● Reuse of wastewater saves 5.3 % from 2007.



FAB 2 REVERSE OSMOSIS REJECT TO AIR SCRUBBERS



WATER CONSERVATION ONGOING EFFORTS

Results of Several Major Water Conservation Projects(hundreds of million gallons per year)

300,000

400,000

500,000

600,000

700,000

800,000

1999 2000 2001 2002 2003 2004 2005 2006 2007



SUCCESSES:NITRATE DISCHARGE REDUCTIONS

● Change process to reduce use of nitric acid

● Sell used acid rather than treat It

● 50 % nitrate discharge reduction in 2005-2007 from both sales and process change

● Over 1300 tons per year of CO2 avoided

● Treatment chemicals and sludge have been reduced by hundreds of thousand pounds per year



NITRATE DISCHARGE REDUCTION PROGRESS

Nitrate Discharges(millions of pounds per year)

0

0,4

0,8

1,2

1,6

2000 2001 2002 2003 2004 2005 2006 2007



LESSONS LEARNED

● Alignment with Corporate Strategy Increases Chances for Environmental Success

● Integration with Business Objectives Acquires Necessary Resources and Promotes Sustainability

● Distributed Responsibility gets Everyone Involved

● Identify the Highest Environmental Impacts, Raw Material Use, and Energy Use

● Projects with multiple benefits have a higher chance of funding



LESSONS LEARNED

● Help Others to Accomplish Objectives within the Timeline and ROI

● Use other Department Budgets to Accomplish your Goals

● Frequent Tracking Maintains Visibility

● Implement Corrective Actions if Necessary

● Review Goals and Update Annually

● Celebrate Achievements and Have the Next Project Proposal Ready !



THANK YOU !

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ACHIEVING ENVIRONMENTAL RESULTS STRATEGY AND EXECUTION Myron Burr Environmental Affairs 2008-05-22